Be afraid. Be very afraid. And then do something about it

23 September 2010

Posted by Neil Rose, Editor, Legal Futures

Manageable chunks: non-lawyer providers are slicing legal work up into different tasks

This is my first proper blog for a week and the reason I have not had a chance to do one sooner (how on earth have Legal Futures readers survived without it, I wonder?) is simply that I have been even busier than usual.

Happily the success of the site (a record 2,565 visits last week, thank you) is getting me in front of lots of interesting people. And what has struck me from the various conversations I’ve had of late is that though we are still more than a year away from alternative business structures (ABSs), there is already an awful lot going on out there. Those lawyers who think that I and others are exaggerating or scaremongering when we report on threats to the traditional practice of law should meet some of these people. It really is happening.

What unites most of the ideas they talk about is that you do not need lawyers to do many of the things lawyers currently do. For example, one of those I met was a non-lawyer probate provider that has broken down the process into 166 tasks and allocates them to five different levels of staff (the top level being the qualified lawyers), and even external lawyers if it is really complex. Interestingly, he wasn’t especially bothered about whether that very top level of advice was inside or outside his ownership – either way those lawyers have to deal with the work in the way he expects, which includes doing it all online in a paperless process, so it doesn’t matter where they are.

Or take the quote from Darren Worth of ABStract Legal Holdings (geddit?) on his new outsourcing service, which along with fellow new outsourcer Judicata is doing the same in personal injury (see story): “Does every cases need the same level of legal input?” he asked. “Probably not.” What he and Judicata are doing is more worrying still (for lawyers, at least), in that they are trying to drive a process where lawyers are largely cut out of “low value, low treatment” cases by the insurers dealing with claimants directly.

That gets into the separate issue of third-party capture/assistance (delete as appropriate depending on whether you are a claimant or defendant representative), but for all that is a valid debate, who would bet against commercially driven minds finding a way around many of the objections? In fact, InterResolve has been on the scene and doing this for some years now, including low-cost independent legal advice on the appropriate level of compensation.

The point is that this genie is out of the bottle and it’s not going back in. Did you know that MyHomeMove, one of the country’s leading conveyancing providers (through licensed conveyancers – and they’re backed by private equity), has outsourced around 60% of the conveyancing process offshore? Since 2005 (that’s right, 2005), Indian outsourcer WNS has drafted contracts, processed mortgage offers, approved contract packs, prepared reports on title, assessed mortgage offers and search results, and prepared financial statements.

The technology is there (most notably from Legal Futures Associate Epoq, it is fair to say) and there are plenty of non-lawyers out there looking at ways of break down the legal process to minimise the need for, and cost of, lawyers – we seem to be heading rapidly in the direction of Professor Richard Susskind’s world of multi-sourcing. But equally it is there to help lawyers help themselves, because all the research shows that there has got to still be a market for face-to-face lawyering, at least if the cost can be brought down.

I have long felt that the heart of the legal services reforms is “Why do I need a lawyer?” By this I mean what is the value they and only they, with all their knowledge and training, can add to the task, that a paralegal with a clever computer can’t? I don’t need to pay £200 an hour for a lawyer to cut and paste a precedent. I do, however, to make sure that my will accurately reflects a particular circumstance in my life, or advise on an unusual return on one of my conveyancing searches. Nothing I have heard in recent days has changed my mind.

I am no law firm consultant (I would live in a much nicer house if I were). But it seems to me obvious enough that every legal practice in the land should be looking at what to do about ABSs. Even if you decide to do nothing (and you may have good reasons for that), at least make that a positive decision, rather than one reached on the grounds that you’re too busy and it’s not going to affect you anyway.

Readers Comments

This market is now right in the heart of radical change. I firmly believe this will be good for everyone even Solicitors, who can use this head of steam to get their practice doing what they should have years back, i.e. more efficient and client friendly. It’s not too late. Now’s the perfect time.

I have been pointing out recently that there are millions of people searching every month for “Solicitor”, and it’s growing fast. This means that they want to have help and advice, BUT they also want price certainty and ease of access.

Solicitors must start using tools like the DirectLaw service http://www.directlaw.co.uk to engage with their clients – connecting the way they practice traditionally with online access and document drafting. Saving a huge amount of time serving clients, making more money, and keeping the Solicitor relationship intact. It’s all possible, to those solicitors that want to understand… we can show them how.

Solicitors can use this time to play piggy back on the changes in the market and not lose out by doing nothing.

In any other sector I could imagine a groundswell emerging that would collectively tackle a lot of the important issues that you raise. Lawyers are not ignorant to the changes but they chose to ignore them or are fearlful in knowing what is the right way to adapt their businesses. The best analogy I have come up with is that instead of trying to find a new model that is truly remarkable (see the Purple Cow by Seth Godin), they are making their decisons by looking in their rear view mirrors. In my view until lawyers start thinking like a buyer they are not going to change their behaviours. In a moment there will emerge a blame game where one part of the regulatory system blames the other as more efficient providers come into the space and squeeze the law firms out.

Neil is so right. No law firm can afford to ignore ABSs. New, well funded competition is happening. Every law firm, big or small, should be considering what services they are and can continue realistically to offer and how to deliver those services. Lower pricing should not necessarily be the driver – there will always be a lower price somewhere so how low do you go? Firms need to find ways of adding value to core services and to improve client service levels so as to differentiate themselves from the largely web based ‘factory’ offerings which will take out of the high street the bread and butter work that firms have traditionally and continue to rely upon, such as conveyancing and probate work. Firms need to refine their matter and production processes to improve margins and lower their cost base.
It may be appropriate to do nothing but at least you need to understand just what others are doing as well as the new competition, only then can you make a considered decision. ABSs will impact every firm. As an adviser what concerns me is that many firms have very little or no understanding at all of what is happening and have not given any thought to their future.
As you say firms should be afraid, very afraid. All is not lost however, there are many things firms can do to ensure a sound future but the time to act is now. Firms should learn as much as they can about ABSs, the new competition, attend courses, seminars etc and then when owners have more understanding plan their way forward.
This will not blow over, there is a very big storm on the horizon and many firms will be blown away, not all will survive.
Your law firm is simply too valuable to you to do nothing at all.

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